Meeting the Challenge of Fast-Moving Consumer Goods

Fast Logistics Group is a family-owned operation based in the Philippines, specializing in the movement of fast-moving consumer goods. A decade ago, it opted to concentrate on transportation, warehousing and distribution services, with the goal of becoming a lead logistics provider.

The company had undertaken a detailed business assessment that revealed “a lot of profit leaks,” says Castillo. Confusion over accountability had resulted in some gray areas and service gaps, along with a lack of innovative thinking as to how Fast Logistics could better serve the customer.

The solution lay in the application of a sales and operations planning (S&OP) discipline, which is more typically found in companies that sell physical products. Castillo says Fast Logistics drew from elements of classic S&OP, including monthly reviews and planning sessions. At the same time, it reconfigured some of those precepts to fit the business model of a logistics provider.

Where a goods-based company might be discussing new product development, for example, Fast Logistics focused on new business development. Considerations included the optimal types of warehouses and material-handling equipment to be deployed in line with customer requirements. Under that system, a single truck would be treated as an SKU. “If we could have a planning horizon to suit requirements of the business for months to come, we would be able to serve the customer better,” Castillo says.

Previously, Fast Logistics was limited to a planning horizon for the coming week. Now it can consider multiple weeks into the future, and agree on the resources that are needed for a given month. A related initiative extends the horizon to the next six months.

The effort begins with a meeting at which the participants look at all new business in the pipeline. They assess their chances of winning the individual accounts, as well as the potential profitability of each engagement. Then the company can define the effort and resources that are needed to service it. After that, Fast Logistics conducts a meeting to determine the future requirements of current and incoming customers, at which point it shifts to the planning of operational capacity.

“We talk about how we can convert all of those customer requirements into containers, warehouse space, trucks and corresponding costs,” Castillo says.